Israel Innovation Authority Launches Support Track for Startups Amid Shekel Appreciation
The Israel Innovation Authority is launching a one-billion-shekel fast-track program to help young tech companies extend their operational runway by six months, mitigating the impact of the dollar's devaluation against the shekel.
The strengthening of the shekel has shortened the operational horizon for young tech companies, and now the state is intervening: a new one-billion-shekel track will provide grants of up to 15 million shekels to extend the life of startups by six months.
Key points
The Israel Innovation Authority is launching a new fast-track program worth one billion shekels for companies affected by the dollar's devaluation. The new track is intended to help young tech companies cope with the shortening of the operational horizon caused by the rapid strengthening of the shekel. It is intended for companies with a lifespan of less than 12 months and will allow them to extend their operational period by 6 months through a grant, complementary financing, and a fast process for reviewing and receiving the investment.
The rapid strengthening of the shekel recently hit startups that raise capital in dollars twice. First, by reducing the operational horizon in a way that forces them to advance future fundraising, and second, by the amount of money they will need to raise in that future round, all without any real change in their operations. Early-growth companies, meaning those in the initial sales stages, which are already funded by dollar revenues, have also been hit in a similar way, and this could affect their ability to invest in rapid growth.
Companies selected for the track will receive a grant aimed at extending their Runway (the operational horizon, the time remaining until they run out of money) by six months. The grant will be 33% or 50% (i.e., two or three months), and companies will be required to provide complementary financing (matching) in the form of a new fundraising, SAFE, a loan, new revenues, and the like. The maximum grant amount will be 15 million shekels.
In a conversation with Calcalist, Dror Bin, CEO of the Israel Innovation Authority, said:
"There are hundreds of companies that are at this stage and have significant technological assets; their financing capacity has shortened due to the appreciation, and they are excellent companies. This is a move that will help them bridge the gap. Companies must bring money from a loan based on sales or a new investment; there is no need to build a new round. We are trying to prevent companies from cutting costs and operating more slowly. We are worried that the pace of breaking into the global market will slow down and companies will not reach their potential. There must not be a situation where competing companies from other places in the world win just because of exchange rates. The track will open next week until November, and those who apply as soon as possible will be able to receive funding even before the holidays. Companies will receive quick answers, within 20 days. We have opened this to all sectors, for every good company that needs money."
The launch of the track is based on the understanding that companies that raised capital with the goal of financing about two years of activity have actually lost about 20% of the activity period they planned, which is a number of Runway months. The meaning is that many companies are required to reach the next fundraising round earlier than planned, sometimes even before they have completed the technological and business milestones they planned. The goal of the track is to provide the time needed to continue research and development activity, complete technological goals, deepen product validation, strengthen business standing, and reach the next investment round more maturely.
The track is intended for startups and young growth companies whose expenses exceeded their revenues during the 12 months preceding the application. In addition, companies must show annual expenses of at least 1.5 million shekels and not exceeding 100 million shekels, where at least half of their expenses are for research and development and at least half of their expenses are carried out in Israel and in shekels. It is also required that the company's operational horizon (Runway) be shorter than 12 months and that the company's age does not exceed 15 years.
